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Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Brenntag AG’s (XTRA:BNR) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Brenntag
Was BNR’s recent earnings decline worse than the long-term trend and the industry?
I like to use the ‘latest twelve-month’ data, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This method enables me to examine various companies on a similar basis, using the latest information. For Brenntag, its latest trailing-twelve-month earnings is €371.90M, which, in comparison to the previous year’s level, has plunged by -4.37%. Since these figures are relatively short-term, I have computed an annualized five-year figure for BNR’s net income, which stands at €339.22M This shows that though earnings declined from last year, over the longer term, Brenntag’s profits have been growing on average.
What’s enabled this growth? Well, let’s take a look at whether it is merely attributable to an industry uplift, or if Brenntag has experienced some company-specific growth. Over the last couple of years, Brenntag increased its bottom line faster than revenue by effectively controlling its costs. This has led to a margin expansion and profitability over time. Viewing growth from a sector-level, the DE trade distributors industry has been growing its average earnings by double-digit 21.31% in the previous twelve months, and a less exciting 5.80% over the past five. This suggests that any uplift the industry is profiting from, Brenntag has not been able to realize the gains unlike its industry peers.
What does this mean?
Brenntag’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. You should continue to research Brenntag to get a better picture of the stock by looking at:
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Future Outlook: What are well-informed industry analysts predicting for BNR’s future growth? Take a look at our free research report of analyst consensus for BNR’s outlook.
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Financial Health: Is BNR’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.